The United States has established itself as a leading market for international real estate investment. And in recent years, China has established itself as an economic powerhouse alongside the U.S. This combination, along with other factors in the Chinese economy, is driving Chinese real estate investors to the U.S.
And according to a 2016 Bloomberg report, this trend does not appear to be slowing down anytime soon.
Why Chinese Real Estate Investors are Choosing the U.S.
Although it’s true that the Chinese economy generates a staggering amount of money each year, there remains a lack of investment opportunities for Chinese citizens in their own country.
“The Chinese have managed to accumulate very large amounts of wealth, and the opportunities to deploy that capital in their own market are somewhat restricted,” Richard Barkham said in the Bloomberg report.
This is due both to the fact that the Yuan is slowly decreasing in value, and housing costs in China are steadily increasing. To give perspective, the property values for residential buildings in Shenzen, Shanghai, and Beijing all increased more than 30% through September of 2016. Shanghai and Beijing were already listed as two of the most expensive cities in the world, even before this increase.
As such, Chinese investors are looking for offshore investments to protect their money from inflation. The natural landing places for these investors are countries and cities that have emerging real estate markets.
Although the United States has long been known as a hotspot for foreign investment, cities like Tampa, for example, have become popular for international real estate investors seeking value and stability.
Despite the Chinese government’s best efforts to limit the cash flowing into other countries, Chinese investors spent an estimated $15 billion on foreign real estate investments in the first half of 2016 alone. This matches the estimated amount spent on foreign real estate properties in all of 2015.
What the Future Holds
Although the numbers for Chinese real estate investment in foreign countries is already staggering, many economists and real estate experts believe this is just the beginning of a much larger migration in investment. In a country of over a billion people, the feeling is that these types of investments are going to start trickling down to the growing middle class as well.
According to a recent estimate by Juwai.com, Chinese holdings in other countries will likely increase to around $220 billion by 2020, which is up from $80 billion in 2015, Bloomberg reported.
Much of this is due to the uncertainty of China’s future, as its citizens want to invest in stable countries with prestigious universities for their children. An estimated 45% of properties purchased outside of China’s borders were for Chinese parents with children at foreign schools.
As such, if you’re someone who is interested in selling real estate in the United States, it’s likely that Chinese buyers are going to be one of your biggest target audiences for both the near and far future.
Graystone Investment Group
Graystone Investment Group is an experienced real estate wholesaler in Tampa Bay. We serve clients who flip homes in as little as 30 days, as well as clients who hold high cash flowing rental properties.
Unlike other wholesaling groups, we provide clients with a turnkey process at no extra charge. We find properties that we resell to investors at discount prices, while also connecting them with private financing. We also coordinate with rehab and management companies we’ve worked with for years.